Payday can come in many forms, and employees at private U.S. companies are banking on growth.

An initial public offering (IPO) can be a major company milestone for a private company’s financial liquidity, and the first part of 2025 saw a 55% year-over-year bump in IPO activity. Some 59 companies went public in Q1 2025 — raising nearly $9 billion — and five of those generated over $500 million, suggesting broad appeal across the market. Technology and healthcare companies accounted for over half of the moves.¹

However, ever-changing U.S. tariffs have injected some uncertainty to the market, which recently saw the slowest April in terms of IPO volume since 2020.²

Accelerated by interest in artificial intelligence, the startup scene has seen sky-high valuations (now featuring $100 billion “hectocorns”). More workers at these private companies are benefitting from a popular opportunity to see a return on their investments — enter: the tender offer.

What is a tender offer?

As part of a wider rewards package — which can include base pay, benefits, and bonuses — equity compensation allows employees to own a stake in the company they work for. Company stock is a non-cash component that could appreciate in value depending on company performance.

Equity can be a common part of private companies’ compensation packages. To fill high-demand roles, providing equity can aid in the recruiting process.³

Read more: The Benefits Blueprint: Benefits to build financially resilient workforces

When workers first start at a company, they may be given a batch of stock options — a grant to have the right to purchase company stock at a specific strike price over a certain time frame. Stock options can come in two types — ISOs (incentive stock options) and NSOs (non-qualified stock options) — with future taxes being one important factor. Using the right to buy the company stock is referred to as exercising the option.⁴

There can be other arrangements where individual shares of that company stock are awarded, in the form of restricted stock units (RSUs) or restricted stock awards (RSAs). The two types of restricted stock differ in terms of tax treatment, when the shares are issued to the employee, and vesting schedules (often based on time or company milestones).⁵

A tender offer occurs when a bidder offers to purchase a certain percentage of a company’s securities, in exchange for a cash amount.⁶ In the case of private companies (which don’t trade on public stock markets), this can be an important event for employees who own company stock.

How a tender offer works

Research has found that the less-tangible nature of employee equity can cause people to overestimate the value of stock options.⁷ A tender offer allows employees to see how value can translate into price.

Either outside parties (such as a private equity firm) or the company itself can be bidders in a tender offer — known as third party tender offers and issuer tender offers, respectively. People who own the securities (like employees owning company stock) have a limited window of time to decide whether they want to participate in the tender offer. The terms of the offer include how much the securities are priced at, and there’s typically a premium over recent valuations, to encourage people to sell their company stock in exchange for cash.⁸

Recent tender offers in 2025 have involved tech companies with notable valuations: a $1.3 billion marketing platform, a $9 billion tech startup, and a $91.5 billion payments processor.^9,10,11

The tender offer terms may also have requirements around working status (like being an active employee as of a certain date) and a minimum amount of shares needed from participants in order for any transactions to take place.¹²

Sometimes, a tender offer can be too popular. In 2024, an HR technology company prohibited former employees holding company stock from participating in a tender offer — that sought $590 million of shares at a valuation of more than $13 billion — if they now worked for a competitor.¹³

How employees benefit from a tender offer

Workers can rack up stock options or awards throughout their tenure, as employers can give “refresher” grants with specific vesting schedules to reward high performance, encourage retention — and instill a (literal and figurative) sense of ownership.

Receiving company stock can hit on three big drivers of job satisfaction, as found through Empower research: Money is the top cause of job satisfaction for 67% of Americans, along with being rewarded for loyalty and longevity at a company (40%) and recognition for job performance (34%).

By selling shares in a tender offer, company stock can become more tangible cash that can be used to reinvest in individual financial goals like buying a home and adding to retirement savings.

Read more: Retirement readiness trends: Financial preparedness snapshot

Tender offer takeaway

For employees at early-stage and private companies, trading in company stock for cash through a tender offer can bring a financial windfall. There can be value in not passing up a wealth-building opportunity: Empower research found that a third of people would have invested in a popular stock if they could go back in time.